Adrian discusses heat pump policy referring to government initiatives and incentives aimed at promoting the adoption and usage of heat pumps for heating. Heat pumps are energy-efficient devices that transfer heat from one location to another, making them an environmentally friendly alternative to traditional heating and cooling systems. Effective heat pump policies include incentives such as tax credits, grants, and rebates to encourage homeowners and businesses to install and use heat pump technology. These policies also focus on setting energy efficiency standards, promoting research and development, and educating the public about the benefits of heat pumps, ultimately contributing to reducing greenhouse gas emissions and energy consumption.
Decarbonisation of heat and decarbonisation of power… our headline news will be it's about three hundred and six gigawatts of power is waiting to be added to the grid and that's a huge, huge amount to put into context. That basically beats any 2035 electricity goal. Some of the wind farms, etcetera we’ve built today, won't be joined until 2038.
Hello, and welcome to Rethink What Matters. The podcast dedicated to aligning the economy with the ecology and everyone for improved business performance, stronger families and a greener, cooler, planet.
And today I'm joined by Adrian Waddelove, Parliamentary and Public Affairs Officer at Energy and Utilities Alliance and Heating and Hot Water Industry Council, an elected Conservative Borough Councillor for Farndon Ward. And we're going to be discussing heat pump policy.
Good morning, Paul. Thanks for having me on.
Brilliant. Brilliant. Brilliant. So I know that this really started out as an interest on my behalf on heat pumps and heat pump policy and what's holding up the heat pump installations. But it can also be a much wider subject if that's what we decide to talk about.
I understand also from speaking with you a little bit earlier that the climate change committee report that comes out once a year has just come out today, so you may even have some hot breaking news for us, which would be very interesting to discuss, too.
Before we get into that, perhaps you could just tell us a little bit about yourself, Adrian, and how you-- what's your journey to becoming the Parliamentary public affairs officer, the energy and utilities alliance, and heating hot water industry council?
Yeah. Thanks, Paul. Yeah. So the Energy and Utilities Alliance today, a not for profit trade association, which represents companies right across the UK heating industry.
It's quite a big organisation and lots of sort of interests need to be represented. So I've been in the role best part of thirteen months now, relatively new, but my boss would say that I've learnt very quickly on the job.
And it is one of those sorts of areas which, of course, has really visibly become sort of bigger in the minds of people with the energy crisis of course, it's last winter and the issue of consumer bills and things like that. So sort of the whole energy sector has really come to life in a lot of people's minds. And it's an incredibly challenging, you know, sector organisation because of the fact that, you know, net zero is 2050 and the and the clock is ticking.
Absolutely. And this whole issue we have today of increasing energy bills, yet we've got to move across to low carbon heating systems.
Yeah. Absolutely. It's balanced, obviously.
So that brings us neatly, I think, perhaps, onto the climate change committee report. Is there anything you can share with us? I know it's only arrived today.
Absolutely. I mean, it’s an annual report which the climate change committee makes to parliament every year, sort of charting sort of where the UK government's going in terms of cutting climate emissions and how we get to net zero by 2050 and it sort of sets out the indicators, you know, amber, red, green, depending on where we are and I think the headline news, let's say, from the last year since we last had it last June is sort of slowing down in that progress.
Not to be particularly surprised given the political sort of upheaval we've been through in the last twelve months, but actually a sort of I think realisation by government as well with the granting of new North Sea Oil and Gas licences is that gas and oil will be an important part of the energy transition.
Of course, how that affects our journey to net zero is obviously the critical point. I think interesting on heat pump specifically, the climate change report is talking about the fact that we need to roll them out faster. And probably focus more on sort of rolling them out to consumers rather than the performance aspect, which means actually quite brave call by the climate change committee. Be interesting to see how that sort of-- how industry reacts to that in a couple weeks.
Okay. Now you say rolling them out. It makes it all sound very easy. But it's you know, there's nothing really sort of rolling out about it, is there? Because whenever I speak with people about heat pumps, the problem is this spark spread or spark gap. The difference in price between electricity and gas. And gas, which was once thought to be the sort of the clean alternative. You know, it's still subsidised, whereas electricity isn't.
Yeah. Absolutely. And that is a critical, critical point, which I think, you know, if you talk to industry, they will raise that. So the government has actually made moves towards changing that. They've brought it out a consultation on the view of energy market arrangements. It's called REMA for short, which looks at decoupling the cost of electricity from gas because gas is obviously a more expensive commodity as opposed to electricity which could be homegrown, renewable, you know, made in Britain sort of thing, used in Britain. And potentially we have a bit of export opportunity. Now the government consulted on changing that.
It was sort of industry reacted positively. They said yes, we do need to change that, but they weren't quite sort of sure or specific on how they're going to do that. Now they're going to bring out another consultation at the end of this year, back end of autumn time. We've reviewed to actually decoupling electricity and gas prices by autumn next year.
Right. Okay. And would that be for the whole of the UK or just England or--?
That would be for the whole of the UK. And, of course, what's important here is that essentially it would bring down the gas or the price of electricity across the board which should, in theory, make it cheaper to use a heat pump, for example because consumer bills would come down. I mean, it's not necessarily the silver bullet because those subsidies at the moment to use to sort of keep the gas and sort of even the coal fired power station sort of cooking in the background during those weeks when we don't have lots of wind and lots of solar. So we, you know, when those yet when we have those periods of slightly less renewable energy, we sort of use those subsidies to make sure that we have that backup supply, which comes back to the point of we need more renewables on the grid so that we have that security.
Okay. That's another subject there, isn't it? I would like to ask you about that. But let me just understand this a little bit better for myself. Gas is subsidised because gas was seen to be the clean alternative back in the day. So gas is subsidised and electricity isn't, is that correct. How does that work?
Yeah. Correct. And, essentially, gas is subsidised to ensure that those power stations keep being sort of maintained throughout the course of the year. So we've got that backup of supply when in February, let's say, wind power is non-existent and solar power is non-existent and we need that backup supply. So that's why those subsidies are there. Obviously, what we need to do, we need to wean ourselves off them onto renewables. And we do that through increasing the amount of renewables on the grid.
Yeah. Yeah. Well, you know, they've made some commitments, I think, haven't they? Yeah. For rolling out as you put it or say that a certain number of heat pumps are installed.
Absolutely. And government has made various attempts at this through various schemes previously. I think first of all, it's actually in 2012 which looked at trying to increase the uptake of heat pumps by consumers. The latest iteration is called the boiler upgrade scheme where the government is essentially paying five thousand pounds for air source heat pumps and six thousand pounds for ground source. They're going to provide that sort of grant to you for up to thirty thousand consumers who can apply for this grant. And I would tell, you know, all your listeners. Do go away and have a look at that because I think that is a good way of potentially if you're sort of new to journey of understanding know, what a heat pump does, how it can be beneficial, and see if, you know, if you install it, obviously it could bring, like, you know, stress that it could bring your electricity costs down, it builds down, you know, your usage of electricity and gas down as well. So I would tell your listeners. Go away. Have a look at that.
Brilliant. Brilliant. Other areas I thought we could discuss is the energy company obligation.
So eco measures and eco plus measures, sort of our government backed schemes to try and drive up the insulation of homes. And this is absolutely critical. If we want to debunk sort of the myths around heat pumps, if that you can put a heat pump in. But you need the thermal efficiency requirements. So for you and I, you know, for laypeople, that is essentially what - air insulation. So, you know, your cavity water insulation and your loft insulation. So the eco measures is a way like, you know, government trying to promote consumers in installing more insulation into their homes.
This, of course, makes them ready for a heat pump because there you have a house which has the levels of thermal efficiency required for a heat pump to run efficiently.
Heat pumps run at about forty five degrees on the flow temperature. A gas boiler runs at sixty degrees. So you need that insulation there to ensure you get your value for money with your heat pump. Once you have those fuel efficiency requirements at that level, with that insulation, then heat pump will cut your will cut your bill quite substantially.
Okay. So what is the-- so there's the eco plus scheme and eco four scheme?
Yes. So these are various situations of the scheme that aimed at slightly different households.
Some are on government related benefits. Others are in particular council tax bands. But essentially, it's the same focus of how can we better insulate homes ready for the next year transition. And obviously know from a government point of view, put insulation today, it will probably be there in 2050, the same insulation and it means that you cut your energy demand today and you cut your bill today. So it saves the consumer, it saves the government And obviously, it means that, you know, it reduces the amount of gas or electricity we use overall.
Okay. Alright. So I think this probably brings us on to consumer habits. Maybe, and the way that we heat our homes and the way we live in our homes and how does that figure in the thinking?
Consumer demand, consumer habits. It's always a really interesting one, this. I mean, data-- if you look at polling and I'm always a bit sceptical, but polling would always indicate that it’s around eighty percent of the of the UK and, you know, believe in climate change they want change their lifestyle habits because of climate change.
But for me, I always look at the proof in the pudding. So consumer habits is we like to do things which don't overly affect the way we live. So for example, if we want to install a heat pump, we need to be honest with the public and with the consumer, that it's not as straightforward as replacing gas boiler. Then a heat pump is saving the planet and a gas boiler is not. So those are the sort of trade offs that we need to be quite honest about.
Heat pump is expensive and that is something that would always put consumers off. I mean, heat pump on average is around thirteen thousand pounds. Interestingly, people, industry say, you know, those costs could come down. What I would say is there are about a hundred and ninety million units.
Heat pumps, air conditioning units, they're pretty much the same unit are installed globally each year. So this is a huge, huge market and the UK is actually slightly behind because we have that extensive gas network. Yeah. If you look at European countries here, Italy, Germany, Germany, France, they have far more pumps anyway.
Yeah. So I suspect the cost of a heat pump won't drop dramatically from around thirteen thousand pounds. Obviously, with inflation at the moment. That's what we only get a slight increase.
And does that exclude the grant? So does it come down to--?
Yeah. So thirteen thousand pounds is sort of your installed cost. With the grant from the boiler upgrade scheme, for example, that would reduce down to, if I could do my math, would be at eight thousand pounds.
Is there any discussion around combining the heat pump with batteries and solar panels and set up thermostat.
Yeah. Absolutely. Paul, that is exactly what sort of the ideal net zero hub would look like. You know, you have your solar PV, you have your batteries, you have heat pump, you've got a couple of electric car chargers, outside, if essentially for quite a few months of the year, you're self-sufficient.
I guess that goes back to the policy level at all within the legislation or the documentation.
It's a good question. I don't think there's been any sort of direct policy move towards that because it's obviously various different strands that need to come together. But I think it's the wish of people. And certainly, if you read sort of, and it goes with evidence of people. They do say that heat pump bashing only works best with your solar PV with your batteries. Because they've got that self-sufficiency. You've got your sort of net zero here.
And then if you switch into you know, use some smart metring so that you can take electricity off the grid when it's green. You know, you can make--.
You can talk about demand flexibility too. And I think we saw that over the last course of over the last winter where various energy companies offered consumers the opportunity to switch on, switch off during peak times and receive a bit of a rebate towards that. And actually, it was generally quite successful. I think around six or seven million consumers actually took part in those trials. And they were relatively short notice and, you know, seven million is about a tenth of the UK population.
Right. Okay. So concerning then the boiler ban that's coming, the gas boiler ban. I think we should just mention that. I think that's just coming in for new boilers though, isn't it? If you've got a gas boiler, you're not expected to rip it out or you are expected to remove it by 2050?
Yes. So there's various different dates that we need to be quite aware of. So 2025, we expect a CD future home standard implemented, which essentially means that there'll be no new gas boilers installed in new build properties.
That's sort of the first tip, so property developers will be putting, we expect, heat pumps in to all new properties from 2025 onwards. 2026 is the expected off grid boiler ban. So if you live off the gas grid, if you're on heating oil, if you're on LPG, then about one point one million homes that are expected to from 2026 be unable to replace those heating oil or LPG boilers, which essentially means they'll be forced into having a heat pump. And then in 2035, looking further ahead, and that's when the on grid on gas grid boiler ban would come in.
But as you say, that's not a case of on the first of January 2035. All the boilers and the country are coming out, that's a case of you won't be able to replace a broken boiler with a newer boiler. But if you already have one, then and you keep it going till forty, 2045, then it's just a case of when that finally breaks in 2045, just replace it with something different.
Okay. I mean, do you have any insight on the mini grids? So this is where people create their own grids, they have their own solar farm or wind turbines. And rather than selling the electricity to the national grid, they keep it on their own grid. I believe there are some hold ups to that, I believe.
Yeah. So it's an interesting, interesting point you make, I mean, it's an area where some people are actually going into quite a bit more because of the obvious rewards and benefits it brings, basically you're self-sufficient. Goes back to your, obviously, your solar PV, your batteries, and your heat pump in your house.
Yeah. I think I mean, it is something that I say people are moving towards. One of the difficulties is and one of the reasons people are doing it actually is because when they sell that power back to the grid, it’s not actually as profitable as it used to be because they're-- actually quite a lot of subsidies back when this began, which made it quite generous actually paying money back to the grid. That's not really the case anymore.
People have actually more happy to store it for a rainy day or indeed a cloudy day when it's cold. And but one of the reasons that people are struggling a bit in terms of connections is the whole idea of the grid connections, you know, we have lots and lots of renewables - renewable power, ready to come onto the grid, but actually we haven't got the transmission connections in place to support that. So the government's actually got some really ambitious 2035 targets for the amount of electricity required. Now we actually got all that electricity that we require for 2035. It's out there. It's ready. It's built.
Green energy, you said? Green energy.
Green energy. Yes. So, for the decarbonisation of heat and decarbonisation of power, there's quite a lot about electricity already there, but it's just not joined up with grid. It's just not connected. And some of the wind farms, etcetera, (that) have been built today, won't be joined until 2038. So that is an area which government is trying to improve, and it's looking--
Do you know what the issues are? Is it planning, permission? Is it budgets? Is it -- just won't have the resources?
It's not budgets because then they’re pretty much built. There is an aspect of, and this is a bit of a previous mis spec mistake going back probably twenty years, is that it’s done on a sort of whoever's applied for planning commission first gets that spot in the queue. So they may not have built it yet, but they're still in the queue. And someone behind them has come in and built theirs, but they're behind them in the queue. So it's a case of shifting that queue around bringing those people for. I mean, cost is obviously an important aspect, the cost of adding into the network.
As I say, you know, that all this renewable power is there ready to come on board, but it's just taking that time. I don't know if the off German national grid are looking at ways of smoothing out that process so that the it makes all the connections sped up.
There are enough installations of wind farms and solar panels to power the UK. They're just not connected to the grid. Is that sort of a summary?
Yeah. Sort of the headlight news would be. It's about three hundred and six gigawatts of power is waiting to be added to the grid, and that's a huge, huge amount to put into context. That basically meets any 2035 electricity goal.
So does that mean peak demand? Does that-- would that mean the peak demand in the middle of winter?
Pretty much, yes. There is a bit of demand flexibility in there as well where we expect a few changes to consumer habits will alter it slightly. But we're not far away. I mean from, in terms of demand flexibility, we're looking at gaining an extra about forty gigawatts from people changing their habits. As I say, there's three hundred and sixty gigawatts waiting to be added. So that sort of sums up where we're at.
That's amazing. It's a great insight, actually, is it? To know where the blockages are Right? You know? It's one thing to think that we haven't got enough wind farms and solar panels out there. It's a completely different one to think they're there, and they're not connected.
And that's the thing that people talk about changing the planning laws, etcetera, to allow green infrastructure. Well, hang on, we don't need to because it's already there. We just need to make sure they're connected.
Just get it connected up. Come on, people. So now I know you did mention earlier before we started recording, small-- you did mention small nuclear modular reactors. Can you just tell us a little bit more about that please?
Yeah. So this is actually something that's powered by a particular company actually that I've looked into investigating the possibility of rolling these out at a really localised sort of area. And the government's meshed quite a lot of money into this. So basically, this would be mini nuclear reactor which would power your village with a couple around the local town. I have my concerns about this and not to, you know, poke cold water in any of it on any of this, but I think there are many, many different questions that need to be answered before we go down this route.
A is, you know, your planning permission. B is, as a local resident, do I want essentially a nuclear reactor? It might be small, but do I want a nuclear reactor, you know, a mile away from where I live. If it goes wrong, who's responsible for sorting that out. Who's responsible for making sure it's secure at all times because you don't want people messing around with nuclear. So it's an area which the government's looking at quite seriously, but actually one which I think would take quite a long time for there to be any proper mileage in that plan.
I suppose it could be a reserve if the renewables fail, a reason there's an alternative energy source perhaps. Are there any other countries doing this that we can copy?
Not that necessarily springs straight to mind. No.
Right. Okay. We'll be leading the way. I'm not too sure we want to lead the way with nuclear. Right?
(Laughs) As Graham Stuart would say, who's the Minister for Energy Security Net Zero. We're, you know, the world leader in offshore wind, for example. So that's where we do want to be a world leader, I think.
So can we talk a little bit about clean heat market mechanisms and, you know, the role that has to play?
Yeah. Okay. So this is quite interesting one. There’s a provision inside the energy bill. And the energy bill is a whacking great big piece of legislation. It's about four hundred and twenty six pages I think, at last count. One of the biggest bills that parliament has seen for many a long year. It was originally brought in and things started on Boris Johnson. It was thought to be caught under his trust. It wasn't.
And then Rishi Sunak has seen it come through. And hoped to give it royal assent by the end of July before parliament go on recess.
And industry would welcome the move to-- Definitely, give the energy bill a world assent. In terms of clean heat market mechanism specifically, so this is sort of a policy to try and drive up the uptake of heat pump, of heat pumps even.
And, essentially, it would fine sort of manufacturers of gas boilers for every heat pump they didn't sell in relation to the number of gas boilers they sell. So I think original proposal’s around four percent to begin with. So they've got to sell four percent of their gas boilers. They've got to sell four percent of heat pumps as well.
So sort of a way of trying to drive up that sort of increase in heat pumps. I think it's trying to promote primarily British manufacturing of the heat pump market. I think industry (has) quite a few concerns because as we go back to a bit about consumer habits, it's all very well (with the) government indicating that they want to do this and it's never a question with or an answer about consumers. Do they really want the products at the moment? And it's all very well, you know, bringing in the legislation. But actually, at the end of the day, it's all about what goes in consumers' houses. And as we've seen over the last few years, they haven't reacted that positively towards heat pumps.
I think things are changing very quickly though, aren't they? I think people do want to help and it's really about education and understanding, you know, what the challenges are and what the benefits are. And then if you can reduce your heating bills by fifty percent and there's a grant available, and you can be doing the right thing. That could be very that could be very appealing to people.
And I think for a lot of people as well, it's a case of they don't quite understand, Paul, exactly what it entails if you see what I mean. And I hope today is sort of trying to find a bit more clarity there about what they need do in order to have heat pump, which will hopefully produce, you know, deleverage bills.
And as you say, education, I mean, I suspect if you ask many, many people in the street, they won't know what a boiler upgrade scheme is, for example. And that's one of the problems that we have. There are these funding mechanisms in place but actually, how do you get them to the consumer to apply for one and get it?
Do you know how many of these heat pumps are made in Britain? Or what’s the sector? Are a lot made abroad and brought in? Or--?
Interesting point. I mean, ninety percent of gas boilers sold in the UK are made in Britain. That's ninety percent. If you look at heat pumps, around currently seventy percent of the heat pumps sold in UK are imported. So actually the home made--
Seventy percent are imported?
Yeah. And they tend to come from Europe or China, actually. About thirty percent there are homemade in England. I mean, if you want to put some figures in it and I do like figures to illustrate the point. So last year, there were about one point six million gas boilers went in the home. And there were about fifty-five thousand heat pumps. So that just tells you exactly the level of work we need to do to get towards net zero. The government has an ambitious target of six hundred thousand heat pumps by 2028.
Even based on that maths, there'll still be about one million gas boilers going in 2028.
Well, I mean, that comes down to how long these gas boilers last, doesn't it? So how long does your average gas boiler last if they're going in new today? Around fifteen years. Or twenty years? Fifteen years.
Fifteen years on average, that's what they say. Fifteen years is probably the lifespan of a gas boiler. And but it's off. I think those figures illustrate the sort of the amount of work that needs to go in towards decarbonising a particularly difficult sector. I think someone who's in that domestic home meeting is exactly that sort of difficult to decarbonise because it is about consumers. It's about what they want in their home as opposed to what industry want them to have in their home. If you see what I mean?
The Heating and Hot Water Industry Council - could you just tell us a little bit of more about that specifically and with the changes that you must be seeing there with this transition to clean energy.
Yeah. Absolutely. So the Heating and Hot Water Industry Council, so HHIC, it is for short, is a sort of division of the Energy and Utilities Alliance, which very much looks at the sort of the manufacturing side of heating appliances. And as you say, you know, we are seeing a sort of a change in the way that review the heating industry in the UK. And you make the perfect point there. I mean, manufacturers, the ones I speak to. They really want to sell more heat pumps. You know, they see them as-- they do see them as a future to that extent. And obviously from their point of view, I mean, they are more expensive. And therefore they get sort of more money from selling them. But I think there's also a bit of, you know, genuine desire in there obviously to limit the impact of climate change.
So we are seeing a massive change and you look at, you know, if you go to one of their meetings, for example, there's such a massive breadth of expertise and talent and the angles they're coming from and some of the work they've done actually. They bought out a new sort of Benchmark App, which is a way of ensuring that appliances that go in the home are of a particular standard and can be sort of signed off by the installer there and then and it's uploaded onto an app. And it's a really good way of doing it. And actually, if you install a list into this, have a look, download it, and use it.
Remind me to say that again. What do they need to look for?
It's called the Benchmark App (Benchmark for Installers) available on the Apple store. That's the possible way for installers to monitor the way that they install appliances.
What about biomass? How does that figure with the Heating and Hot Water Industry Council. Is that something which they're looking at?
Biomass is a really interesting question. I'm not sure it's necessarily all been sort of answered.
The government is keen on biomass. And I think they see that as an alternative maybe in sort of the off-grid areas. But I think it's very much “watch this space.” HHIC will do work a bit around that.
But as I say, interestingly, government (is) supposed to release a biomass strategy outlining the uses of it, etcetera. And it was actually supposed to be the end of June. We are at the end of June. So once again, that will drop any minute as we expect. Probably next week now. And so interesting to see what view, what sort of role they see biomass is going to have in the future there. And I will be watching with interest.
It seems to me that the most important thing that we can do is to join all these dots up and have one story that coins up, heat pumps, solar panels, batteries, biomass, distributed heating, smart switching, you know. That all needs to have a single story, doesn't it? Because it works best when it all works together.
Absolutely. Wholistic whole. And that is, you know Paul, you basically you don't need me here. You basically summed up exactly what it is that is most important.
And if we swap out your heat pump specifically, that's it. Think of the house as a wholistic whole. No, it's not just the gas boiler that, you know, works without the insulation, without the solar PV, without the batteries.
No. Think about your house's entire energy system. Have yourself a PV, your batteries, your heat pump, electric pressure.
Sorry, Adrian. I'm really referring to government and policy and strategy, and these reports that come out. Are there reports that are coming out that are joining up all the dots into a single story?
I pause because I'm thinking about it and to be honest, unbalanced. No. No. There is a sort of let's say, joined up policy, if you like.
You get bits and pieces there, bits and pieces here. I mean, a lot of companies do some really not work at sort of debunking and pointing out some of these policy gaps where they exist in order to make sure that we do reach our ambitious targets on time. So yes, if we were going to ask for government or something, that's it. And actually what I hear from industry constantly is just give us clarity. Clarity about the journey ahead, clarity about where we're going and when.
Yeah. That's great. So this has been such a great podcast, Adrian. We've really covered a lot of ground. I got a much better understanding of what the policies are of the government.
Yeah. Absolutely. Thanks, Paul. I've got to say, I really appreciate the time you've given up this morning listening to me, and I hope your listeners do benefit from hearing what we've spent about this morning.